This blog contains all my media, marketing and digital columns written for the Eastern Daily Press newspaper, the biggest selling regional morning newspaper in England. I hope you enjoy.

Monday, 18 March 2013

Morrisons online and convenience stores - the great catch up

The supermarket business is a
fascinating one. People have short memories but I can remember walking into
supermarkets that just sold food. In a relatively short space of time UK
supermarkets have grown significantly in size, products and profits. You can now
buy everything from pharmaceuticals to clothing to homewares to technology and
music. In food itself they have created own range labels, chilled food and whole
new ways of buying alcohol. In a relatively short space of time they have
changed our high streets.

Continuing this growth, which
delivers the profits that keep shareholders happy, is difficult and needs
constant innovation. Supermarkets moved to online retailing as a new route to
grow. Then, having taken things away from the high street, the supermarkets are
now taking them over as well. Our papers are often filled with news of campaigns
to stop another supermarket store opening, especially the new high street based
convenience style stores such as Tesco Express Sainsbury’s Local. So while three
of the top four supermarkets have driven ahead with online services and
convenience outlets, one has been conspicuous in its absence; Morrisons.

Morrisons is not having a great time
at the moment. It has recently posted a 7.2% fall in pre-tax profits to £879m
for the year to 3rd February. This is its first fall in full-year profits for
six years and like-for-like sales were down more than 2%. As part of this
announcement its Chief executive Dalton Philips announced that it is pushing
ahead with rolling out its new convenience stores and, more importantly, it will
finally launch an online offering.

With both of these areas they are
playing catch up. They have already opened 12 “M” branded convenience stores,
have bought 62 other sites from the administrators of HMV, Blockbuster and
Jessops and want 100 opened by the end of this year. As a comparison Sainsbury’s
has over 500 of its ‘Local’ convenience stores already.

However it is online where they
really have been caught out. Online food shopping is growing at about 20% per
year and Tesco, Asda and Sainsbury’s attribute it as a source of strong growth
for them. While the announcement from Morrisons is not surprising there is a
question of what took them so long. It now hopes to have an operation in place
by January 2014 and announced that it has been talking to online food operation
Ocado about sharing technology and knowledge to help it achieve that.

Learning from others’ mistakes is
fine but playing catch up in a market that is moving so quickly is extremely
difficult. Morrisons does not have a loyalty card like the Tesco Clubcard which
uses data from that to populate its online offering with what a customer
normally buys in store. In this game they have proved that big data matters.
Where they might have an edge is in m-commerce with Ocado reporting that 28% of
its orders are from mobile devices.

Morrisons is a long way from its
first store opened in Bradford in 1961 by Sir
Ken Morrison and one of the PG Tips chimps who cut the tape. Whether these new
initiatives are the right thing to do is not in question; whether they have left
it too late is another though. Hopefully partnering with experience, especially
with someone with experience in the biggest growth area of mobile will give them
the kick start they need to catch up.

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About Me

My name is Tim Youngman, I am director of marketing for a regional newspaper group in the UK.
This blog contains the columns I write on media, marketing and technology for the Eastern Daily Press newspaper in the UK www.edp24.co.uk England's largest selling regional morning newspaper.
You can find our more about me here:
www.linkedin.com/in/timyoungman
and follow me on twitter @timyoungman